China will subsidise its biomass power generation with 2.5bn yuan ($386mn) as part of efforts to reduce carbon emissions, according to main economic planning agency the NDRC and the national energy administration NEA.
But any impact from such a move is likely to be limited to the domestic market, with a ban on wood pellet imports for combustion purposes since 2017.
China has been placing a greater emphasis on biomass fuel recently in a bid to achieve carbon neutrality by 2060. Burning biomass fuels in general produces significantly less carbon emissions than coal. But biomass is regarded as equally reliable as coal unlike other renewable sources such as solar and hydropower that could be subject to unpredictable climate conditions, market participants said. Biomass is typically co-fired with coal for electricity generation to minimise carbon footprint, as well as for industrial boilers and domestic heating.
China has 34.09GW of installed biomass power generation capacity as of the end of July, an increase of 34.1pc on the year, according to the China Electricity Council (CEC). The increase is more significant when compared with total biomass generation capacity at just 10GW in 2017.
China generated 77.95TWh of electricity with biomass over January-June, an increase of 26.6pc on the year, according to the NEA. The top six biomass electricity generating provinces in China were Guangdong, Shandong, Zhejiang, Jiangsu, Anhui and Henan, with output volumes in descending order.
A shortage of thermal coal since the start of this year and difficulties in securing sufficient seaborne cargoes have also prompted Chinese authorities to seek alternative fuel for power generation.
Domestic emphasis
China's efforts on building its biomass portfolio has so far centered on using residential and agricultural waste as fuels rather than importing other typical biomass products such as wood pellets and palm kernel shells.
The southwest Chinese city of Chongqing has invested 7.9bn yuan ($1.2bn) to build 23 biomass power plants that will focus on residential waste as feedstock. The plants are expected to be constructed by 2035 and will raise the city's waste burning capacity by 11,500 t/d, market participants estimate.
Xining city in China's northwestern Qinghai province is also stepping up investments in residential waste burning power plants. The city is expected to see such plants turn operational by next year and produce at least 0.451 TWh/yr of electricity.
A ban by China on wood pellets for combustion use since 2017 remains in place. It is unclear what motivated the ban, but it is believed to be linked to quality control issues, market participants said.
